HIGHBRIDGE MULTI-STRATEGY FUND LIMITED

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this Circular or the action you should take, you are recommended to seek immediately your own personal financial advice from your independent financial adviser, stockbroker, bank manager, solicitor, accountant or from an appropriately qualified and duly authorised independent adviser. This Circular is not being sent to Shareholders with registered addresses in the United States or in any other jurisdiction where its circulation would be unlawful. Accordingly copies of this Circular or any accompanying documents are not being mailed and must not be, directly or indirectly, mailed or otherwise distributed, forwarded or transmitted into the United States or any other such jurisdiction and all persons receiving such documents (including, without limitation, custodians, nominees and trustees) should observe these restrictions and must not mail or otherwise distribute, forward or transmit them in, into or from the United States or any other such jurisdiction. If you have sold or otherwise transferred all of your Shares in the Company, please send this Circular and the accompanying documents at once to the purchaser or transferee or to the stockbroker, bank or other person through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee. However, such documents should not be distributed, forwarded or transmitted in or into the United States or into any other jurisdiction if to do so would constitute a violation of the relevant laws and regulations in such other jurisdiction. HIGHBRIDGE MULTI-STRATEGY FUND LIMITED (a closed-ended investment company incorporated with limited liability under the laws of the Island of Guernsey with registration number 44704) Proposal for a Tender Offer for up to 20 per cent. of the Shares Notice of Extraordinary General Meeting The Tender Offer will close at 6.00 p.m. on 19 October 2016 and will only be available to Eligible Shareholders on the Register at the close of business on 19 October The Tender Offer described in this Circular is conditional on the approval of the Shareholders of the first Special Resolution at the Extraordinary General Meeting. Notice of the Extraordinary General Meeting to be held at Ground Floor, Dorey Court, Admiral Park, St Peter Port, Guernsey GY1 2HT at a.m. on 21 October 2016 is set out at the end of this Circular. Shareholders are requested to return the Form of Proxy accompanying this Circular for use at the Extraordinary General Meeting. To be valid, the Form of Proxy must be completed and returned in accordance with the instructions printed thereon so as to be received by Anson Registrars Limited, PO Box 426, Anson House, Havilland Street, St Peter Port, Guernsey GY1 3WX, as soon as possible and in any event not later than 48 hours (excluding weekends and any bank holiday) before the time of the Extraordinary General Meeting. Eligible Shareholders who hold their Shares in certificated form (that is, not in CREST) who wish to tender their Shares under the Tender Offer will find enclosed with this Circular a Tender Form for use in connection with the Tender Offer which should be completed and returned with their share certificate(s) either by post or by hand to Anson Registrars Limited, PO Box 426, Anson House, Havilland Street, St Peter Port, Guernsey GY1 3WX before 6.00 p.m. on 19 October Eligible Shareholders who hold their Shares in uncertificated form (that is, in CREST) who wish to tender their Shares under the Tender Offer should follow the procedure set out in the paragraph 4 in Part II of this Circular, which can be found on pages 17 to 18 and should ensure that their TTE 11/ _6 1

2 Instruction(s) (together with the relevant CREST Holder Form(s)) are submitted by 6.00 p.m. on 19 October IF YOU DO NOT WISH TO TENDER ANY OF YOUR SHARES PURSUANT TO THE TENDER OFFER, DO NOT COMPLETE OR RETURN A TENDER FORM AND DO NOT SUBMIT A TTE INSTRUCTION OR CREST HOLDER FORM. THE TENDER OFFER IS BEING MADE BY THE COMPANY AND ACCORDINGLY THIS CIRCULAR IS NOT TO BE REGARDED AS HAVING BEEN AUTHORISED OR ISSUED BY HCC OR ITS INVESTMENT MANAGER HIGHBRIDGE CAPITAL MANAGEMENT, LLC. The opportunity to participate in the Tender Offer is not being made in or into, or to any Shareholder resident in, the United States, or any other jurisdiction in which the same would be unlawful. Your attention is drawn to the section entitled "Action to be taken by Shareholders" on page 13 of this Circular which includes a recommendation from the Board that you vote in favour of the Resolutions to be proposed at the Extraordinary General Meeting. Your attention is also drawn to the Company's Risk Disclosure Document (which can be found on the Company's website at which sets out information on certain risks and other aspects of the Company s investment in HCC. Capitalised terms used in this Circular shall have the meanings set out in the section entitled "Definitions" on page 28 of this Circular. 11/ _6 2

3 Background EXECUTIVE SUMMARY As approved by Shareholders in February 2016, the directors have the power to offer Shareholders a quarterly cash exit opportunity at NAV (less costs) with respect to up to 20 per cent. of the Shares in issue. The Board is pleased to announce that the first such opportunity will take place by way of a Tender Offer in October 2016 with tendering Shareholders receiving most of the cash consideration in February Before going into further detail regarding the mechanics of the tender offer, the Board would like to reiterate and expand upon the views which were shared in the Chairman s Statement in the recently published Half Yearly Financial Report of the Company. The Board hold a strong view that Highbridge Capital Management have performed well since their appointment as investment manager, particularly over recent months, by delivering a steady and consistent return within the underlying fund. Since the appointment of Highbridge Capital Management, LLC as investment manager of the Company on 29 February 2016, the Company s NAV per Share (excluding the impact of the Residual Assets) has increased 4.91 per cent. during a time of considerable market volatility. 1 Conversations with a large range of Shareholders confirm that many of you believe that the Company is a useful and important investment holding and many would welcome the Company growing in size, with the attendant benefits of reduced costs and greater liquidity. It is, therefore, our aim to increase the size of the Company as soon as practicable. The Board hopes that Shareholders share its view, can see the benefits of remaining invested in the Company for the longer term and value the potential for the multi-strategy approach to deliver positive returns even in volatile markets. The Board believes it has demonstrated its credentials in regard to buying-back Shares to seek to address the discount since This has been continued over the summer of 2016 and the Board is very alert to the desire of Shareholders regarding the stability of the discount to NAV. Shareholders should note, however, that any future buy-backs, should they take place, may not be successful in addressing the discount. As at 22 September 2016, the Shares were trading at approximately a 7 per cent. discount. As a result, the Board has decided to provide a tender for up to 20 per cent of the Shares in issue. This will provide Shareholders with an opportunity to realise a proportion of their investment in the Company (in whole or in part, subject to tenders from other Shareholders) whilst enabling the Company to hold Tendered Shares in treasury with the view to placing those Tendered Shares in the future. Full details of the Tender Offer are set out in the remainder of this Circular which should be read carefully by Shareholders. Board recommendation The Board considers that the proposed terms of the off-market purchase agreement for the purchase of Shares tendered under the Tender Offer and the disapplication of pre-emption rights for the re-sale of Shares out of treasury by the Company are in the best interests of the Company and of Shareholders as a whole. Accordingly, the Board unanimously recommends Shareholders to vote in favour of all Resolutions to be proposed at the Extraordinary General Meeting as the Directors intend to do in respect of their entire beneficial shareholdings in the Company. No Director intends to participate in the Tender Offer in respect of their beneficial shareholdings in the Company. The Board makes no recommendation as to whether or not a Shareholder should participate in the Tender Offer. The extent to which Shareholders participate in the Tender Offer is a matter for each Shareholder to decide and will be influenced by their own individual financial and tax circumstances and investment objectives. Shareholders who are in any doubt as to the action they should take should consult an appropriate independent professional adviser. Action to be taken by Shareholders in connection with the EGM and the Tender Offer Extraordinary General Meeting 1 Data presented from 1 March 2016 to 16 September Past performance is not indicative of future performance or returns and there can be no assurance that the Company s return objectives will be realised or that the Company will not experience losses. 11/ _6 3

4 You will find enclosed with this Circular a separate Form of Proxy for use at the Extraordinary General Meeting. Whether or not you intend to be present at the Extraordinary General Meeting, you are requested to complete the Form of Proxy in accordance with the instructions printed thereon and to return the Form of Proxy to Anson Registrars Limited, PO Box 426, Anson House, Havilland Street, St Peter Port, Guernsey GY1 3WX to arrive by the time and date specified on the Form of Proxy. The completion and return of the Form of Proxy will not preclude you from attending the Extraordinary General Meeting and voting in person if you wish to do so. Tender Offer CREST Shareholders If you are an Eligible Shareholder and hold your Shares in uncertificated form (that is, in CREST) and you wish to participate in the Tender Offer you do not need to complete or return a Tender Form. You should, however, take (or procure to be taken) the action set out below to transfer (by means of TTE Instruction(s)) the total number of Shares you wish to tender under the Tender Offer to an escrow balance, specifying Anson Registrars Limited in its capacity as escrow agent under its participant ID referred to below, as soon as possible, and in any event so that the transfer to escrow settles not later than 6.00 p.m. on 19 October In addition, please note that there is no CREST payment method available and therefore if you wish to participate in the Tender Offer, any payment will be made in accordance with the bank details indicated in the CREST Holder Form (or in the absence of such indication by cheque despatched at the latest known address as indicated on the Register). Accordingly, you should read the CREST Holder Form carefully, complete it and return it (and, if the CREST Holder Form is executed by someone other than you, the authority of that other person to do so) either by post or by hand to Anson Registrars Limited, PO Box 426, Anson House, Havilland Street, St Peter Port, Guernsey GY1 3WX before 6.00 p.m. on 19 October Tender Offer Certificated Shareholders If you are an Eligible Shareholder and hold your Shares in Certificated Form and you wish to participate in the Tender Offer you should read the Tender Form carefully, complete it and return it with the share certificate(s) in respect of the total number of Shares you wish to tender under the Tender Offer and such other evidence as the Directors may reasonably require to prove your title and the due execution by you of the Tender Form or, if the Tender Form is executed by someone other than you, the authority of that other person to do so either by post or by hand to Anson Registrars Limited, PO Box 426, Anson House, Havilland Street, St Peter Port, Guernsey GY1 3WX before 6.00 p.m. on 19 October Shareholders are not obliged to tender any Shares and if they do not wish to participate in the Tender Offer, they should not complete or return their Tender Form or submit a TTE Instruction or CREST Holder Form. 11/ _6 4

5 CONTENTS EXPECTED TIMETABLE...6 PART I LETTER FROM THE CHAIRMAN INTRODUCTION AND BACKGROUND TENDER OFFER RISK FACTORS COSTS AND EXPENSES ASSOCIATED WITH THE PROPOSALS REGULATORY CONSIDERATIONS EXTRAORDINARY GENERAL MEETING ACTION TO BE TAKEN BY SHAREHOLDERS IN CONNECTION WITH THE EGM DOCUMENTS AVAILABLE FOR INSPECTION RECOMMENDATION...14 PART II TERMS AND CONDITIONS THE TENDER OFFER...15 PART III TAXATION...24 DEFINITIONS...28 NOTICE OF EXTRAORDINARY GENERAL MEETING / _6 5

6 EXPECTED TIMETABLE EXTRAORDINARY GENERAL MEETING 2016 Latest time and date of receipt of Form of Proxy for the Extraordinary General Meeting Extraordinary General Meeting Announcement of results of the Extraordinary General Meeting a.m. on 19 October a.m. on 21 October 21 October TENDER OFFER Latest time and date for receipt of Tender Forms and TTE Instructions (together with the relevant CREST Holder Forms) for the Tender Offer Record Date Announcement of results of the Tender Offer Repurchase of Shares pursuant to the Tender Offer Payment of the initial tranche of the Tender Price (if applicable)* Highbridge Capital Corporation (HCC) redemption date 6.00 p.m. on 19 October 19 October 21 October 21 October Within 5 Business Days following 21 October 31 December Payment of the second tranche of the Tender Price* Within 5 Business Days following receipt by the Company of the proceeds of redeeming the relevant portion of the Company's holding in HCC (expected to be by 15 February 2017 subject to any applicable redemption gate, suspension or other delay by HCC) Payments of subsequent tranches of the Tender Price* Within 5 Business Days following receipt by the Company of cash proceeds of realising assets comprised in the Repurchase Portfolio *Shareholders should note that there is no CREST payment method available and therefore Shareholders holding their Shares through CREST (i.e., in uncertificated form) must complete and return (together with the submission of a TTE Instruction) a CREST Holder Form to the Registrars including bank details. Shareholders who have not indicated bank details (either in the Tender Form or the CREST Holder Form) will be paid by cheque despatched at the latest known address as indicated on the Register. *Shareholders should note that the Company may hold back any payment until a material amount is available for distribution to Tendering Shareholders to avoid the cost and administrative burden of distributing small amounts. Each of the times and dates in the above expected timetable may be extended or brought forward without further notice. If any of the above times and/or dates change, the revised time(s) and/or 11/ _6 6

7 date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service. All references are to London time unless otherwise stated. 11/ _6 7

8 PART I LETTER FROM THE CHAIRMAN HIGHBRIDGE MULTI-STRATEGY FUND LIMITED (a closed-ended investment company incorporated with limited liability under the laws of the Island of Guernsey with registration number 44704) Directors: Vic Holmes (Chairman) Paul Meader Steve Le Page Sarita Keen Registered office: Ground Floor Dorey Court Admiral Park St. Peter Port Guernsey GY1 2HT 26 September 2016 PROPOSAL FOR A TENDER OFFER FOR UP TO 20 PER CENT. OF THE SHARES IN ISSUE NOTICE OF EXTRAORDINARY GENERAL MEETING Dear Shareholder, 1. INTRODUCTION AND BACKGROUND 1.1 General Further to the extraordinary general meeting of the Company held on 24 February 2016 (the "February EGM") which resulted in the adoption of the Company's current investment policy and investment management arrangements, on 1 March 2016 the Company invested the proceeds received by it from the realisation of its investment in the BlueCrest Funds (net of costs and expenses and all amounts paid to Shareholders who redeemed their Shares pursuant to the Cash Exit Offer) into Highbridge Capital Corporation ("HCC"). Consequently, the Company's assets currently comprise shares in HCC, cash retained for working capital purposes and its remaining unrealised holding in the BlueCrest Funds (the "Residual Assets"). As at 22 September 2016, the Residual Assets accounted for approximately 10 per cent. of the Company's NAV. Alongside the changes to the Company's investment policy and investment management arrangements, Shareholders also approved amendments to the Company's Articles to introduce an ability for the Directors, at their absolute discretion, to operate a quarterly redemption facility for up to 20 per cent. of the Shares in issue at the relevant time (excluding Shares held in treasury). The purpose of the redemption facility was to provide a means by which the Directors could seek to manage the discount to NAV per Share at which the Shares may trade from time to time. The Board believes it has demonstrated its credentials in regard to buying-back Shares to seek to address the discount since This has been continued over the summer of 2016 and the Board is very alert to the desire of Shareholders regarding the stability of the discount to NAV. Shareholders should note, however, that any future buy-backs, should they take place, may not be successful in addressing the discount. 11/ _6 8

9 As at 22 September 2016, the Shares were trading at approximately a 7 per cent. discount. As a result, the Board has decided to provide a tender for up to 20 per cent of the Shares in issue. This will provide Shareholders with an opportunity to realise a proportion of their investment in the Company (in whole or in part, subject to tenders from other Shareholders) whilst enabling the Company to hold Tendered Shares in treasury with the view to placing those Tendered Shares in the future. Shareholders are not obliged to tender any Shares and if they do not wish to participate in the Tender Offer, they should not complete or return their Tender Form or submit a TTE Instruction or CREST Holder Form. The primary purpose of this Circular is as follows: to inform Shareholders about how they can tender Shares for purchase, if they are eligible and wish to do so; to set out the terms and conditions of the Tender Offer; and to give notice of the EGM at which the Company will seek the necessary Shareholder authorities to conduct the Tender Offer. 1.2 Tender Offer Under the terms of the Tender Offer, which is being made by the Company, Eligible Shareholders on the Register on the Record Date will be entitled to tender some or all of their Shares for purchase by the Company at the Tender Price (as described below), less the costs of implementing the Tender Offer. The number of Shares which will be repurchased by the Company pursuant to the Tender Offer (both generally and in respect of any individual Shareholder) will be subject to the limits described in paragraph 2.1 below. All Tendered Shares will be purchased off-market by the Company pursuant to the terms of an Off- Market Purchase Agreement between the Company and the Tendering Shareholders which shall be constituted by this Circular and the Tender Form (or, in the case of Shares held in uncertificated form, the CREST Holder Form) (together, the "Off-Market Purchase Agreement") and held in treasury (to the extent permitted by any applicable legal or regulatory requirements) until sold or cancelled by the Company. The Tender Offer is conditional upon the terms of the Off-Market Purchase Agreement and may be suspended or terminated in certain circumstances as set out in paragraph 6 in Part II of this Circular. The Tender Offer is also subject to certain conditions as set out in paragraph 2 in Part II of this Circular. 1.3 Shareholder Approval Required In order to implement the above proposals (the "Proposals"), it will be necessary to seek Shareholder approval in respect of the terms of the Off-Market Purchase Agreement and for the disapplication of pre-emption rights for the re-sale of Shares out of treasury by the Company. This Circular sets out details of, and seeks your approval for, the Proposals and explains why the Board is recommending that you vote in favour of the resolutions to be proposed at the Extraordinary General Meeting to be held on 21 October 2016 (the "Resolutions"). The EGM Notice in respect of the Extraordinary General Meeting is set out at the end of this Circular. 2. TENDER OFFER 2.1 General The Company is proposing a Tender Offer to be made for up to 20 per cent. of the Shares in issue on the Record Date (excluding Shares held in treasury) at the Tender Price. The Tender Offer is being proposed to enable those Shareholders who wish to realise their investment in the Company to do so (in whole or in part, subject to tenders from other Shareholders), whilst enabling the Company to hold Tendered Shares in treasury with the view to placing those Tendered Shares in the future. Accordingly, Eligible Shareholders on the Register on the Record Date are invited to tender for sale some or all of their Shares to the Company. All Tendered Shares will be purchased off-market by the Company pursuant to the terms of the Off-Market Purchase Agreement and held in treasury (to the extent permitted by any applicable legal or regulatory requirements) until sold or cancelled by the Company. 11/ _6 9

10 All tenders of Shares shall be made on the terms and subject to the conditions set out in Part II of this Circular and the accompanying Tender Form for Shares held in certificated form or CREST Holder Form for Shares held in uncertificated form. A summary of the principal terms of the Tender Offer is as follows: The maximum number of Shares that will be repurchased by the Company under the Tender Offer is equal to 20 per cent. of the Company s issued share capital as at the Record Date (excluding Shares held in treasury); All Eligible Shareholders on the Register as at the Record Date will be able to decide whether to tender some or all of their Shares to the Company. Each Eligible Shareholder will be entitled to tender and have repurchased up to 20 per cent. of the Shares registered in such Shareholder's name on the Record Date rounded down to the nearest whole number of Shares (the "Basic Entitlement"). Each Eligible Shareholder will also be entitled to tender additional Shares held by it on the Record Date in excess of its Basic Entitlement. To the extent that other Eligible Shareholders tender Shares in respect of less, in the aggregate, than the whole of their Basic Entitlement, any such excess tenders will, subject to the overall 20 per cent. limit on the number of Shares which may be purchased by the Company pursuant to the Tender Offer, be satisfied pro rata in proportion to the aggregate number of Shares tendered by Eligible Shareholders in excess of their Basic Entitlements (rounded down to the nearest whole number of Shares). The Tender Price which will be received by each Tendering Shareholder for their Tendered Shares will be paid in tranches and be equal to the relevant Tendering Shareholder's pro rata share (based on the total number of Tendered Shares) of (i) a proportion of the cash (if any) held in the Company's portfolio attributable to the Tendered Shares; (ii) the proceeds of redeeming the portion of the Company's holding in HCC attributable to the Tendered Shares; and (iii) the realisation proceeds of the Residual Assets attributable to the Tendered Shares; less the costs of implementing the Tender Offer. The Tender Offer is being made by the Company which will purchase the Shares tendered by way of an off-market acquisition, in accordance with the Companies Law. Further details on the Tender Price are set out in paragraph 3 in Part II of this Circular. The Tender Offer is subject to the conditions set out in paragraph 2 in Part II of this Circular. The Tender Offer may also be suspended or terminated in certain circumstances as set out in paragraph 6 in Part II of this Circular. 2.2 Mechanics of the Tender Offer The Tender Offer is an offer by the Company to Shareholders to request that all or part of their Shares held as at the Record Date (being 19 October 2016) be repurchased by the Company. A Shareholder who tenders part or all of its Shares pursuant to the Tender Offer will need to submit a Tender Form for Shares held in certificated form or TTE Instruction(s) (together with the relevant CREST Holder Form(s)) for Shares held in uncertificated form for the number of Shares that they wish to tender by 6.00 p.m. on 19 October Details on submitting Tender Forms and TTE Instructions (together with the relevant CREST Holder Form(s)) are set out in paragraph 4 in Part II of this Circular. 2.3 Proceeds of the Tender Offer Following the receipt of the Tender Forms and/or CREST Holder Forms from Eligible Shareholders and the passing of Resolution 1, the Board will allocate to a separate account in the books of the Company (the "Repurchase Portfolio") (a) the proportion of the cash (if any) held in the Company's portfolio attributable to the Tendered Shares, (b) the proportion of the Company's holding in HCC which is attributable to the Tendered Shares, and (c) the proportion of the Residual Assets which is attributable to the Tendered Shares. The Shares to be purchased pursuant to the Tender Offer will be purchased on the Repurchase Date. Each Shareholder selling its Shares on such date pursuant to the Tender Offer will be entitled to receive its pro rata share (based on the total number of Tendered Shares) of: (a) the cash comprised in the Repurchase Portfolio (if any) within 5 Business Days of the Repurchase Date; (b) the cash comprised in the Repurchase Portfolio within 5 Business Days following receipt by the Company of 11/ _6 10

11 the proceeds of redeeming the relevant portion of the Company's holding in HCC (such proceeds are expected to be received by 15 February 2017 subject to any applicable redemption gate, suspension or other delay by HCC); and (c) the actual amount received by the Company from the realisation of the Residual Assets comprised in the Repurchase Portfolio as soon as practicable following receipt of such realisation proceeds by the Company (subject in each case to the Company's ability to defer the distribution of non-material sums in order to avoid undue administrative cost and burden), less the costs and expenses of implementing the Tender Offer. Tendering Shareholders should be aware that they will therefore receive the sale proceeds as a number of cash payments and that there may be considerable delay before such sale proceeds are distributed in their entirety. The Company will make an announcement to Shareholders shortly following implementation of the Tender Offer and again when any further cash payment is to be made, which will state what proportion of the Repurchase Portfolio has been distributed to Tendering Shareholders and, to the extent known to the Company, when Tendering Shareholders can expect to receive any outstanding amounts. The Tender Price to be paid to Tendering Shareholders will only be finally determined following the complete realisation of the assets comprised in the Repurchase Portfolio. The Company will on a monthly basis publish an unaudited estimated NAV for the Repurchase Portfolio based on information received by the Company, which Tendering Shareholders may choose to take as indicative of the potential realisation proceeds of the Repurchase Portfolio and the Tender Price they may receive. Tendering Shareholders should be aware, however, that there is no guarantee that the assets comprised in the Repurchase Portfolio will in fact be realised for the values attributed to them for the purposes of calculating such estimated NAVs. Therefore, the Tender Price received may be materially different to that indicated by the estimated NAVs of the Repurchase Portfolio published from time to time. The purchase of the Tendered Shares under the Tender Offer will constitute a distribution for the purposes of the Companies Law. Accordingly, the Board will follow the procedure for making a distribution set out at section 303 of the Companies Law and will consider the statutory solvency test set out therein. Under current UK taxation law and practice, the repurchase of Shares pursuant to the Tender Offer should constitute a disposal for the purposes of Shareholders subject to UK capital gains tax. Further details of the tax consequences of the Tender Offer are set out in Part III of this Circular. 2.4 City Code Under Rule 9 of the City Code, any person who acquires an interest (as defined in the City Code) in shares which, taken together with shares in which he is already interested and in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the City Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares. Similarly, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person. Under Rule 37.1 of the City Code, when a company redeems its own voting shares, a resulting increase in the percentage of shares carrying voting rights in which a person or a group of persons acting in concert is interested will be treated as an acquisition for the purposes of Rule 9. However, a person not acting, or presumed to be acting, in concert with any one or more of the directors will not normally incur an obligation to make a mandatory offer under Rule 9 if, as a result of the redemption of shares by a company, they come to exceed the percentage limits set out in Rule 9. Consequently, Shareholders should be aware that following implementation of the Tender Offer it is possible that certain Shareholder(s) will be interested in Shares carrying 30 per cent. or more of the voting rights in the Company without their having to make a mandatory offer under Rule 9 of the City Code to acquire the Shares of all other Shareholders. 11/ _6 11

12 3. RISK FACTORS Shareholders should, when considering how to exercise their votes at the EGM or whether to participate in the Tender Offer, have regard to the following risk factors. Once a Tender Form has been returned to the Company or a TTE Instruction(s) (together with the relevant CREST Holder Form(s)) has been submitted, such Tendering Shareholder will be unable to access or otherwise deal in the Shares to be tendered, pending completion of the Tender Offer. Shares will be held in escrow subject to the completion of the Tender Offer. A Tender Form or TTE Instruction(s) (together with the relevant CREST Holder Form(s)), once submitted, may only be withdrawn with the consent of the Company. With effect from the Repurchase Date, Tendering Shareholders will cease to be Shareholders in the Company with respect to such Tendered Shares and will instead become general creditors of the Company with respect to any unpaid portion of the Tender Price. The Tender Price received by Tendering Shareholders may be less than the price at which they bought their Shares or the price or value at which they might ultimately realise their Shares should they continue to hold them. There is no guarantee that the market price of the Shares will fully reflect their underlying Net Asset Value at any time. As with all listed investment company shares, the discount (or premium) to Net Asset Value at which shares trade may fluctuate from day to day, depending on factors such as supply and demand, market conditions and general sentiment. The lower number of Shares in issue following completion of the Tender Offer may reduce secondary market liquidity in the Company s Shares which could, accordingly, adversely affect a continuing Shareholder s ability to sell its Shares in the market. Securities laws in certain jurisdictions may prevent certain Shareholders from participating in the Tender Offer. For more information, please refer to paragraph 5 in Part II of this Circular below. The issued share capital of the Company will be reduced as a result of the Tender Offer to the extent that Shares are tendered. Consequently, the fixed costs of the Company will be spread over fewer Shares. The repurchase of Tendered Shares by the Company will be conditional on the Company being satisfied that it will, immediately following such repurchase, satisfy the solvency test prescribed by the Companies Law. There can be no guarantee that the Company will satisfy the solvency test, in which case the Tender Offer and payment of the Tender Price may be postponed or terminated. Shareholders should also note that the Company s investment in HCC is subject to various restrictions on redemptions, including that HCC is not required to permit redemptions of more than 10 per cent. of the aggregate net asset value of the participating shares of HCC on a quarterly redemption date, which may delay any redemption request made by the Company. In addition, HCC may suspend or defer redemptions and/or delay the payment of redemption proceeds in certain circumstances. Accordingly, there may be considerable delay before such redemption proceeds are distributed in their entirety to Tendering Shareholders. The full amount of the Tender Price to be paid to Shareholders can only be determined following the complete realisation of the Repurchase Portfolio. The Company will on a monthly basis publish an estimated NAV per Tendered Share for the Repurchase Portfolio, which Tendering Shareholders may choose to take as indicative of the potential realisation proceeds of the Repurchase Portfolio and the Tender Price they may receive. Shareholders should however note that the Tender Price received by a Tendering Shareholder may be materially different to that indicated by any estimated NAV per Tendered Share for the Repurchase Portfolio published by the Company. 11/ _6 12

13 The tax treatment of amounts received on the repurchase of Shares by the Company may vary, perhaps significantly, between different types of Shareholders and between Shareholders in different jurisdictions. It is the responsibility of each individual Shareholder to determine what tax treatment would be applicable to the receipt by that Shareholder of the proceeds of redemption. If a Shareholder becomes a substantial shareholder as a result of not participating in the Tender Offer, or is already a substantial shareholder and does not participate, there is a risk that control of the Company may become more concentrated as a result of the Tender Offer. Shareholders attention is also drawn to the Company's Risk Disclosure Document (which can be found on the Company's website at which sets out information on certain risks and other aspects of the Company s investment in HCC. 4. COSTS AND EXPENSES ASSOCIATED WITH THE PROPOSALS If the Tender Offer does proceed, the costs and expenses incurred by the Company in connection with the Proposals will be borne by those Shareholders tendering Shares pursuant to the Tender Offer pro rata to the number of Tendered Shares. Such costs and expenses are currently expected to amount to approximately 150,000. If the Tender Offer does not proceed, the costs of the Tender Offer will be borne by all Shareholders as the Company will be liable for the payment of such costs. 5. REGULATORY CONSIDERATIONS The Company is a closed-ended investment company limited by shares. The Company is incorporated and domiciled in the Island of Guernsey. The Company operates under the Companies (Guernsey) Law 2008, as amended and regulations made under that law. The Company is authorised as an authorised closed-ended collective investment scheme by the Guernsey Financial Services Commission (the "GFSC") and is subject to the Authorised Closed-Ended Investment Schemes Rules The GFSC will be notified of the Tender Offer. The Board shall be entitled to defer any effective date specified in this Circular and the implementation of the Tender Offer in their absolute discretion to accommodate any legal, regulatory or operational requirements that are not resolved prior to or on the relevant effective date. 6. EXTRAORDINARY GENERAL MEETING The Proposals are subject to Shareholder approval. The EGM Notice convening the Extraordinary General Meeting, to be held at a.m. on 21 October 2016 at the registered office of the Company, is set out at the end of this Circular. The EGM Notice includes the full text of the Resolutions. In order to become effective the Special Resolutions tabled at the Extraordinary General Meeting must be approved by a majority of not less than seventy five per cent. of the votes cast by Shareholders present in person or by proxy at each of the Extraordinary General Meeting. The quorum for the Extraordinary General Meeting shall be two or more Shareholders present in person or represented by proxy representing not less than one-twentieth of the Shares in issue and entitled to vote at the Meeting. If the Extraordinary General Meeting needs to be adjourned because it is not quorate, it will be adjourned to the same time and place one week later, whereupon those shareholders then present in person, by their representative or by proxy, shall form the quorum. In the event of any such adjournment the Company will announce the adjournment via a RIS but no notification will be sent directly to Shareholders. 7. ACTION TO BE TAKEN BY SHAREHOLDERS IN CONNECTION WITH THE EGM You will find enclosed with this Circular a separate Form of Proxy for use at the Extraordinary General Meeting. Whether or not you intend to be present at the Extraordinary General Meeting, you are requested to complete the Form of Proxy in accordance with the instructions printed thereon and to return the Form of Proxy to Anson Registrars Limited, PO Box 426, Anson House, Havilland Street, St Peter Port, Guernsey GY1 3WX to arrive by the time and date specified on the Form of Proxy. 11/ _6 13

14 The completion and return of the Form of Proxy will not preclude you from attending the Extraordinary General Meeting and voting in person if you wish to do so. 8. DOCUMENTS AVAILABLE FOR INSPECTION A copy of this Circular will be available for inspection at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG and at the registered office of the Company during normal business hours on any Business Day (Saturdays and public holidays excepted) from the date of this Circular until the conclusion of the Extraordinary General Meeting and at the place of the Extraordinary General Meeting for at least 15 minutes prior to, and during, the relevant meeting. A copy of the Articles will also be available on the Company's website: A copy of this Circular has been submitted to the National Storage Mechanism and will shortly be available for inspection at This Circular will also be available on the Company's website: 9. RECOMMENDATION The Board considers that the proposed terms of the Off-Market Purchase Agreement and the disapplication of pre-emption rights for the re-sale of Shares out of treasury by the Company are in the best interests of the Company and of Shareholders as a whole. Accordingly, the Board unanimously recommends Shareholders to vote in favour of all Resolutions to be proposed at the Extraordinary General Meeting as the Directors intend to do in respect of their entire beneficial shareholdings in the Company. The Board makes no recommendation as to whether or not a Shareholder should participate in the Tender Offer. The extent to which Shareholders participate in the Tender Offer is a matter for each Shareholder to decide and will be influenced by their own individual financial and tax circumstances and investment objectives. Shareholders who are in any doubt as to the action they should take should consult an appropriate independent professional adviser. No Director will be tendering any of his Shares under the Tender Offer. Yours faithfully Vic Holmes Chairman 26 September / _6 14

15 1. GENERAL PART II TERMS AND CONDITIONS THE TENDER OFFER 1.1 All Eligible Shareholders on the Register on the Record Date may tender Shares for purchase by the Company on the terms and subject to the conditions set out in this Circular and in the Tender Form (for Eligible Shareholders holding their Shares in certificated form) or CREST Holder Form (for Eligible Shareholders holding their Shares in uncertificated form). Eligible Shareholders are not obliged to tender any Shares. 1.2 The maximum number of Shares that will be purchased by the Company under the Tender Offer will not exceed 20 per cent. of the Company s issued share capital (excluding Shares held in treasury) as at the Record Date. 1.3 The Tender Offer is made at the Tender Price calculated in accordance with paragraph 3 below. The calculations approved by the Directors will be conclusive and binding on all Eligible Shareholders. 1.4 The consideration for each Tendered Share acquired by the Company pursuant to the Tender Offer will be paid in accordance with the settlement procedures set out in paragraph 4 below. 1.5 Upon the Tender Offer becoming unconditional and unless the Tender Offer has lapsed or terminated in accordance with the provisions of paragraph 2 or paragraph 6 below, the Company will, subject to the limit described in paragraph 1.2 and to the terms and conditions of the Tender Offer as set out in this Part II, accept the offers of Eligible Shareholders validly made in accordance with this Part II. 2. CONDITIONS OF THE TENDER OFFER 2.1 It should be noted that the Tender Offer is conditional on the following (together the "Conditions"): the passing of the first Special Resolution as set out in the EGM Notice, on 21 October 2016 or by such later date (being not later than 30 Business Days after 21 October 2016) as the Company may determine; valid tenders being received in respect of at least three per cent. of the Company s Shares (excluding Shares held in treasury) by 6.00 p.m. on 19 October 2016; no Shareholder being required by the Panel to make a mandatory offer pursuant to Rule 9 of the City Code as a result of the Tender Offer (if it were completed) immediately following completion of the Tender Offer; and the Tender Offer not having been terminated in accordance with paragraph 6 below prior to the fulfilment of the conditions referred to above. 2.2 If the Conditions are not satisfied or waived the Tender Offer will lapse and the Company will not purchase any Shares pursuant to the Tender Offer. 3. CALCULATION AND ANNOUNCEMENT OF THE TENDER PRICE 3.1 Following the receipt of the Tender Forms and/or CREST Holder Forms from Eligible Shareholders and the passing of Resolution 1, the Board will allocate to the Repurchase Portfolio (a) the proportion of the cash (if any) held in the Company's portfolio attributable to those Tendered Shares, (b) the proportion of the Company's holding in HCC which is attributable to the Tendered Shares, and (c) the proportion of the Residual Assets which is attributable to the Tendered Shares. 3.2 The Shares to be purchased pursuant to the Tender Offer will be purchased on the Repurchase Date. 11/ _6 15

16 3.3 The Tender Price which will be received by each Tendering Shareholder for its Tendered Shares will be paid in tranches and be equal to the relevant Tendering Shareholder's pro rata share (based on the total number of Tendered Shares) of: the proportion of the cash (if any) held in the Company's portfolio attributable to the Tendered Shares; the proceeds of redeeming the portion of the Company's holding in HCC attributable to the Tendered Shares; and the realisation proceeds of the Residual Assets attributable to the Tendered Shares; less the costs and expenses of implementing the Tender Offer. 3.4 It is anticipated that the initial tranche of the Tender Price (if applicable) would be paid to Tendering Shareholders within 5 Business Days of the Repurchase Date and the second tranche of the Tender Price within 5 Business Days following receipt of the redemption proceeds from HCC (such proceeds are expected to be received on 15 February 2017 subject to any applicable redemption gate, suspension or other delay by HCC). The remaining portion of the Tender Price would be distributed to Tendering Shareholders in tranches upon receipt by the Company of the proceeds of realising the Residual Assets. Any such payments will, however, be subject in each case to the Company's ability to defer the distribution of non-material sums in order to avoid undue administrative cost and burden. 3.5 Shareholders should note that, as referred to above, the Company s investment in HCC is subject to various restrictions on redemptions, including that HCC is not required to permit redemptions of more than 10 per cent. of the aggregate net asset value of the participating shares of HCC on a quarterly redemption date, which may delay any redemption request made by the Company. In addition, HCC may suspend or defer redemptions and/or delay the payment of redemption proceeds in certain circumstances. Accordingly, there may be considerable delay before such redemption proceeds are distributed in their entirety to Tendering Shareholders. 3.6 Unless terminated in accordance with the provisions of Part II of this Circular, the Tender Offer will close for Shareholders at 6.00 p.m. on 19 October Subject to the Conditions being satisfied, it is expected that on 21 October 2016 the Company will make a public announcement of the total number of Shares tendered pursuant to the Tender Offer and, if applicable, either the extent to which tenders will be scaled back, or the number of Shares in excess of the Basic Entitlement which will be purchased by the Company from Shareholders who have tendered Shares in excess of their Basic Entitlement. 3.7 Delivery of cash to Tendering Shareholders for the Tendered Shares will be made by Anson Registrars Limited in its capacity as receiving agent. Anson Registrars Limited will act as agent for Tendering Shareholders for the purpose of receiving the cash and transmitting such cash to Tendering Shareholders. Under no circumstances will interest be paid on the cash to be paid by the Company or Anson Registrars Limited regardless of any delay in making such payment. 3.8 If any Shares are not purchased because of an invalid tender, the termination of the Tender Offer or otherwise, relevant certificates evidencing any such Shares and other documents of title, if any, will be returned or sent as promptly as practicable, without expense to, but at the risk of, the Tendering Shareholder, or in the case of Shares held in uncertificated form (that is, in CREST), Anson Registrars Limited will provide instructions to Euroclear to transfer all Shares held in escrow balances by TFE Instruction to the original available balances to which those Shares relate. 4. ACTION TO BE TAKEN IN CONNECTION WITH THE TENDER OFFER Certificated Shareholders 11/ _6 16

17 4.1 Enclosed with this Circular is a Tender Form for use by Eligible Shareholders who hold their Shares in certificated form (that is, not in CREST) (each a "Certificated Shareholder") (please see paragraph 4.2 below for full details) and who wish to participate in the Tender Offer. 4.2 If you are an Eligible Shareholder and hold your Shares in Certificated Form and you wish to participate in the Tender Offer you should read the Tender Form carefully, complete it and return it with the share certificate(s) in respect of the total number of Shares you wish to tender under the Tender Offer and such other evidence as the Directors may reasonably require to prove your title and the due execution by you of the Tender Form or, if the Tender Form is executed by someone other than you, the authority of that other person to do so either by post or by hand to Anson Registrars Limited, PO Box 426, Anson House, Havilland Street, St Peter Port, Guernsey GY1 3WX before 6.00 p.m. on 19 October You may request to have all or part of your Shares to be tendered under the Tender Offer. A Tender Form may only be submitted in respect of a number of Shares, rather than in respect of a certain value of Shares. CREST Shareholders 4.4 If you are an Eligible Shareholder and hold your Shares in uncertificated form (that is, in CREST) (a "CREST Shareholder") and you wish to participate in the Tender Offer you do not need to complete or return a Tender Form. You should, however, take (or procure to be taken) the action set out below to transfer (by means of TTE Instruction(s)) the total number of Shares you wish to tender under the Tender Offer to an escrow balance, specifying Anson Registrars Limited in its capacity as escrow agent under its participant ID referred to below, as soon as possible, and in any event so that the transfer to escrow settles not later than 6.00 p.m. on 19 October In addition, please note that there is no CREST payment method available and therefore if you wish to participate in the Tender Offer, any payment will be made in accordance with the bank details indicated in the CREST Holder Form (or in the absence of such indication by cheque despatched at the latest known address as indicated on the Register). Accordingly, you should read the CREST Holder Form carefully, complete it and return it (and, if the CREST Holder Form is executed by someone other than you, the authority of that other person to do so) either by post or by hand to Anson Registrars Limited, PO Box 426, Anson House, Havilland Street, St Peter Port, Guernsey GY1 3WX before 6.00 p.m. on 19 October You should send (or, if you are a CREST sponsored member, procure that your CREST sponsor sends) a TTE Instruction to Euroclear UK & Ireland Limited for the Shares that you wish to tender under the Tender Offer which must be properly authenticated in accordance with its specifications. Each TTE Instruction must contain, in addition to the other information that is required for the TTE Instruction to settle in CREST, the following details: the number of Shares to be transferred to an escrow balance; your CREST participant ID; your CREST member account ID; the participant ID 7RA80 of the escrow agent (Anson Registrars Limited) in its capacity as a CREST receiving agent; the member account ID for the relevant Shares of the escrow agent (Anson Registrars Limited), which will be TENDER in respect of the Shares; the corporate action ISIN which is GB00B13YVW48; 11/ _6 17